Monday, August 11, 2008
The prospect of 5% inflation loomed closer today.
The Office for National Statistics said that producer price inflation jumped to a higher-than-expected 10.2% on the year to July - the sharpest annual rise since the series began in 1986. The yearly rise in core output prices, which strips out erratic elements like raw materials and oil, also signalled further inflation pressures in coming months, with this rate hitting its highest point since 1981. Alan Clarke, economist at BNP, warned that today's rise in output prices posed a "significant risk" to consumer prices inflation over the coming year "even if energy prices begin to come down". Separate trade figures from the ONS today added to the gloom. The UK's trade deficit in goods with the rest of the world widened more than expected to £7.7bn in June compared with £7.4bn in May.